In a major move aimed at accelerating the adoption of electric vehicles (EVs) in India, the government has unveiled the PM E-Drive scheme, replacing the previous FAME 2 initiative, which expired in March 2024. With an overall budgetary outlay of ₹10,900 crore for the next two years, the PM E-Drive scheme is poised to bring about significant changes in the EV landscape by providing substantial subsidies and promoting the development of necessary infrastructure.
What is the PM E-Drive Scheme?
The PM E-Drive scheme, under the supervision of the Ministry of Heavy Industries, has been designed to drive India’s transition towards sustainable transportation. This new scheme addresses the gaps left by FAME 2 and provides a more focused and ambitious framework for EV adoption across the country.
Key highlights of the PM E-Drive scheme include:
- Budget Allocation: ₹10,900 crore for two years.
- Subsidy/Demand Incentives: ₹3,679 crore allocated for electric two-wheelers (e-2Ws), electric three-wheelers (e-3Ws), electric trucks, buses, and ambulances.
- Infrastructure Development: ₹2,000 crore allocated for installing EV charging stations across the country.
Subsidies and Coverage
The PM E-Drive scheme will provide subsidies for the purchase of various types of electric vehicles, ensuring affordability for both individual consumers and public transport agencies. The scheme will specifically support:
- 24.79 lakh electric two-wheelers (e-2Ws)
- 3.16 lakh electric three-wheelers (e-3Ws)
- 14,028 electric buses (e-buses)
Additionally, electric ambulances and electric trucks are also covered under this scheme, marking a significant expansion in the types of vehicles eligible for subsidies compared to the FAME 2 initiative. These subsidies aim to offset the high upfront costs of electric vehicles, making them more accessible to the general population and government bodies.
Expansion of Charging Infrastructure
A crucial component of the PM E-Drive scheme is the development of EV charging infrastructure, which has long been a major bottleneck in the mass adoption of electric vehicles in India. To address this, the scheme will facilitate the installation of:
- 22,100 fast chargers for electric four-wheelers (e-4Ws)
- 1,800 fast chargers for electric buses
- 48,400 fast chargers for electric two- and three-wheelers
This allocation of funds for infrastructure development reflects the government’s commitment to providing comprehensive support for EV adoption, not only for consumers but also for commercial and public transport sectors.
Electric Bus Procurement and Public Transport
A major focus of the PM E-Drive scheme is on the procurement of 14,028 electric buses for state transport units (STUs) and other public transport agencies. This will help modernize India’s public transportation system and make it more environmentally friendly.
The government has also announced that demand aggregation for these buses will be carried out by Convergence Energy Services Limited (CESL) across nine cities with populations exceeding 4 million. These cities include:
- Delhi
- Mumbai
- Kolkata
- Chennai
- Ahmedabad
- Surat
- Bangalore
- Pune
- Hyderabad
In addition to intra-city transport, intercity and interstate e-bus services will be developed in consultation with respective states to further boost sustainable travel.
Current EV Market and Challenges
Currently, EV adoption in India is in its early stages, with a market penetration rate of around 7%. Electric two-wheelershave been the most popular, accounting for 56% of total EV sales last year, followed by electric three-wheelers with a share of 38%.
Despite growing interest, challenges such as high upfront costs and limited charging infrastructure have hampered faster adoption. The subsidies provided under schemes like FAME 2 have played a crucial role in lowering the cost of electric vehicles for consumers.
However, FAME 2, which was launched in 2019 with an outlay of ₹10,000 crore, fell short of some of its ambitious targets, particularly in terms of public transport vehicles. The new PM E-Drive scheme aims to address these issues and accelerate EV adoption in India.
The Transition from FAME 2 to PM E-Drive
FAME 2, which initially supported a variety of EVs including two-wheelers, three-wheelers, four-wheelers, and buses, was extended till March 2024 with a budget of ₹1,500 crore after its original expiration date in 2022. Over its term, FAME 2 facilitated the purchase of:
- 11.7 lakh electric two-wheelers
- 1.3 lakh electric three-wheelers
- 16,631 electric four-wheelers
- 4,766 electric buses
The scheme was instrumental in providing subsidies and developing charging infrastructure. However, with its expiration, a temporary scheme named EMPS 2024 was introduced with a limited budget of ₹500 crore, later increased to ₹778 crore. This scheme offered incentives for electric two- and three-wheelers but excluded four-wheelers, highlighting the need for a more comprehensive approach.
With the launch of PM E-Drive, the government has once again stepped up its commitment to supporting EV adoption by expanding the scope of subsidies, promoting public transport electrification, and addressing infrastructure challenges. The focus on electric trucks, buses, and ambulances in addition to two- and three-wheelers marks a significant evolution in the country’s approach to green mobility.